After a dull day yesterday and a very disappointing speech by Bush, we’re up in pre-markets.
We’re still looking to make the minimum levels we were looking for yesterday so it’s going to be difficult to impress us with a pre-market flurry, most likely bought on by Paulson’s scheduled spot on CNBC this morning, which just ended and amounted to the same nothing our President gave us yesterday.
I made my macro statements in my review of Tom’s State of the Market Review this morning so we can skip right along to Asia, where things were flat(ish) this morning and there was little news to drive the markets. Chinese and Japanese banks did very well but airlines took a hit as China Eastern rejected an offer from Singapore Airlines as well as an offer from Air China. In order to make sure those planes don’t get too crowded, China has been cracking down on thier one-child policy, revoking Communist Party memberships from violators. As China’s economy booms and incomes surge, especially in urban areas, the Communist leadership has become concerned that special treatment of the rich and powerful could aggravate mounting social tensions and shake its grip on power.
In addition to Bush giving us nothing substantial yesterday and Paulson coming on CNBC and talking about fishing this morning, other things that scare me are Jim Cayne getting dumped at BSC and KBH reporting a 31% drop in revenues as 58% of the orders they took were canceled last quarter (something we predicted at the time).
Fed Gov. Plosser says we may not get cuts but we WILL get more inflation: "Providing liquidity to the market does not solve the fundamental problems of repricing risky assets and assessing counterparty risks," Mr. Plosser said, adding "write-downs play a necessary and important role in restoring the health of financial markets. Ultimately, the markets will have to sort it out." Mr. Plosser did add that the Fed’s Term Auction Facility, which has thus far auctioned off $40 billion in liquidity to markets, has been thus far "successful."
I was very close to throwing in the towel yesterday as a weekend of looking at charts and my overall market concerns were already starting to get to me. I had said that oil hitting $100 was the last straw last Thursday but Bush had me buying gold bars yesterday with his 2pm "solution" for the economy which was, SURPRISE!, more tax cuts. My sole hope right now rests on two very silly things. One, that Cramer and his pals are manipulating the markets and this sell-off is forced (as he discusses in detail in this video) and two, that expectations are set so low at this point that it will be hard not to exceed them which should give us, at least, somewhat of a bounce into earnings season.
After that, it’s a whole new ballgame!